The Weekly Top 3
The Weekly Top 3
The Weekly Top 3 (7.28.2025)
Welcome to The Weekly Top 3 — our look at the top 3 things on our mind here at Alaskans for Sustainable Budgets — for the week of July 28, 2025.
This week, our top 3 issues are these: 1) we explain how a recent op-ed demonstrates why some legislators seem not to grasp how Alaska oil taxes work (2:15), 2) we explain why Sen. Shelley Hughes potentially has a significant leg up on fiscal issus over other candidates in the coming Governor’s race (20:49), and 3) we explain why we think, with one exception, a recent op-ed by Kevin McCabe makes a significant contribution toward understanding the K-12 issue (38:40).
The Weekly Top 3 is a regular weekly segment on The Michael Dukes Show. The Show broadcasts on Facebook and YouTubeLive as well as via streaming audio from the Show’s website weekdays from 6–8am. We join Michael weekly in the first hour of Tuesday’s show, from 6:25–7am, for a discussion between the two of us about our three issues.
Hi, this is Brad Keithley, managing Director of Alaskans for Sustainable Budgets. Welcome to the weekly top three the top three things on our mind here at Alaskans for Sustainable Budgets for the week of July 28th 2025. The weekly top three is a regular segment on the Michael Dukes Show. The show broadcasts on both Facebook Live and YouTube Live as well as via streaming audio from the show's website. Weekdays from 6 to 8 am.
Speaker 1:I join Michael weekly in the first hour of Tuesday's show from 610 to 7 am for a discussion between the two of us about our three issues. We post the podcast of our discussion following the show on the Alaskans for Sustainable Budgets Facebook, youtube, soundcloud, spotify and Substack pages. Also on the Alaskans for Sustainable Budgets website, as well as the project's page on national blog site mediumcom, you can find past episodes of the weekly top three also at the same locations. Keep in mind that, in addition to these podcasts during the week, you can also follow and participate in the discussion with us of these and other issues affecting Alaska's fiscal and economic condition by following us on the Alaskans for Sustainable Budgets Facebook page and through our posts on Twitter.
Speaker 1:This week, our top three issues are these First, we explain how a recent op-ed demonstrates why some legislators seem not to understand how Alaska's oil taxes work. Second, we explain why Shelley Hughes potentially has a significant leg up on other candidates on fiscal issues in the coming governor's race. And third, we explain why we think, with one exception a recent op-ed by Kevin McCabe makes a significant contribution towards understanding the K-12 issue. And now let's join Michael.
Speaker 2:All right, brad. Well, we've got some great topics today. Let's dive into it and get started. We're going to start off with the weekly top three, topic number one. It seems like some legislators just don't seem to understand how oil taxes work. Again, you've been on this topic for a while, but it just still seems like nobody's listening. You keep using that word. I don't think it means what you think it means kind of thing. Let's get started here on this.
Speaker 1:Well, maybe repetition will help. That's why it keeps popping up occasionally in the top three. This segment was triggered by an op-ed that House Minority Leader Mia Costello wrote in this week's ADN, and I'm sure it will appear in other publications. I think I saw it in Must Read somewhere along the way. Also, the title of it is Alaska has the Chance to Seize Prosperity with the Big Beautiful Bill, and it talks about various things that the federal One Big Beautiful Act accomplishes with respect to Alaska, particularly focusing on opening up NPRA, additional leasing in NPRA and in ANWR on the North Slope and the potential that brings for oil development.
Speaker 1:The thing that you know if I had a magic wand that I could get all 60 legislators and the governor to understand is it is good that we will have additional production. That results in jobs. That results in additional development. It lowers the cost of taps, because more volume through taps lowers the per unit cost of taps. It opens up new potential for discovering additional fields up on the slopes. So that's all good, but the thing that people are overlooking is that it hurts the state, hurts state revenues in not only in the near term, but as we're discovering this decade and seeing the impact that SB21 is having in the current decade, in the environment of the current decade, not only in the near term, but also in the medium term and perhaps in the long term, depending upon how long this goes on for. And the reason it hurts it is because the reason it hurts state revenues is because two factors One, there is no state royalty from federal lands.
Speaker 1:Now I understand that as part of the One Big Beautiful Act, representative Begich got a provision that increases royalty sharing from NPRA and increases royalty sharing from ANWR. But the royalty sharing from NPRA is still subject to the local preference, that is, the royalties. Even though it's increased, the royalties are still subject to the federal law that requires that they be spent on the slope with slope communities, local communities on the slope. And so the fact that royalties will increase at some point and it's something like seven years down the line that this increase kicks in, the fact that royalties increase doesn't help state revenues. Certainly in the near term, because it doesn't kick in for a while or, depending upon how you define it, the intermediate term, because it still doesn't kick in for seven years or so. But even when it kicks in, those royalties are going to be subject to the local preference rule and so, at least from NPRA, the state isn't going to benefit from any federal royalties. We're going to continue to, from a royalty standpoint, continue to have state royalties and, as the 10-year forecast points out, those remain flat. Those state royalties remain flat. From a state standpoint, we're replacing the declining production curve but we're not adding to it, and so over the course of the 10-year period, that's in the current DOR projection, state revenues from state royalties, revenue from royalties, stays relatively flat over that period. We don't get any from the federal lands.
Speaker 1:Spending that goes on and the development of new volumes combine to result in a decline in production taxes. We went over this last week but production taxes hit a low in the late point of the projection period. Production taxes historically been a billion or so plus or minus. Production tax has historically been a billion or so plus or minus. They hit a low of $220 million in the late part of the current 10-year forecast period. They sort of bumped back up to $400 million the last couple of years, but that's still less than half than what they were in 2024. In 2024.
Speaker 1:So this additional development that everybody's excited about legitimately so. But this additional development that everybody's excited about isn't a prosperity for state revenue standpoint. It is, in fact, a hit to state revenues. Now the legislature can get out in front of that and can readjust oil taxes. I mean, we readjusted oil taxes in 2013 because they were overtaking from producers and de-incentivizing, disincentivizing incentive in the state. Now we've got a situation where we are undertaking from producers and we're hurting the state by doing that, so state revenues by doing that, and so the state legislature can get out in front of that and make some adjustments to the way that SB21 works by making some changes that amortize the impact of additional investments over an extended period, make sure that the state realizes additional production tax revenues as we have additional production coming on. But the legislature can do that, but the legislature hasn't yet done that.
Speaker 1:So the way SB21 is operating, it's reducing production tax revenues over the projection period. It's reducing production tax revenues over the projection period. Here's the key to that. It's not like we're going to be reducing state spending proportionately to that reduction in revenues. Not even the Republicans have come up with proposals on how you would reduce state spending in the same fashion that revenues are going down. Revenues are going down. So what we're doing by not addressing production taxes, not addressing that hit that comes from additional development, is we're going to increase the burden on personal taxes. We're going to continue to take heavily from the PFD until perhaps it's gone and then we're going to kick over into other personal taxes.
Speaker 1:So the legislature legislators who are saying yay, yay, obba, opens things up, it's going to be happy days, are here again. They're not understanding. I don't think they're not understanding what that influx of investment, that influx of spending dollars in the oil industry, that influx of new volumes which are subject to a lower tax rate under SB 21,. They're not understanding what that's going to do to state revenues. State revenues from production tax don't even hold steady. They go down because of the way that those additional spending is going to affect production taxes and the consequence of that is increased.
Speaker 1:I mean, what they're essentially cheering for is increased personal taxes, because that's what's going to have to happen in order to fill the gap that's created by the declining oil taxes. So I think legislators who are getting out there and cheering OBBA, I understand why they're doing it. I understand that the industry certainly is encouraging them to do it and the industry is certainly saying, well, this will be good. We get additional leases in MPRA, we can develop step-outs in MPRA, we can get additional volumes out of MPRA and I understand what they're hearing from the producers in that regard but they need to understand what's going on with oil taxes. They need to understand, in particular, what's going on with production taxes and they need to understand that all of this additional development is creating a situation in which oil taxes, production taxes, will continue to decline, which boomerangs back on the need for additional personal taxes.
Speaker 2:You know, I think it's interesting in reading the article, reading the opinion piece. I mean, in nowhere there does she talk about new revenues or anything else. This is. It seems like all the talk around this is very aspirational, right. I mean, oh, look at all the great things that are going to come because of this and you pointed them out New building, new growth, new job, employment, things like that but again, it's not the cure-all. I think a lot of them are looking at it as if this will be the cure-all. This specific article doesn't talk about revenues, but we've seen others that say look at all the money that'll be flowing into the state, when the answer is that there's not because of all the reasons you just outlined, and so I don't know why they keep going back to this and banging on that drum. Specifically, I mean it's good, don't get me wrong, this is good stuff, but it's not the solution that they keep seeming to point towards.
Speaker 1:Well, yeah, she doesn't talk about revenues, but she doesn't talk about state revenues. But she also doesn't talk about the adverse impact, the negative impact on state revenues. I mean it's almost as if state revenues sort of remain neutral or yeah, it'll be good, because generally good, but it's not. I mean, the way SB21 was set up was to restart investment in Alaska, and people came up with various ideas. One was to allow the immediate deductibility of capital costs instead of the amortization, the immediate deductibility of capital costs. Another was what's called GVR gross value reduction, which is to charge to have a lower tax rate on new production as opposed to old production. And so, as new production replaces old production, the production tax goes down. Assuming the volumes are equal, the production tax goes down because you're replacing with new volumes or replacing the old production at lower tax rates, replacing the old production at lower tax rates than the old production had. And then we've got the per barrel credits, that sort of kick in in the late part of the period and start impacting taxes as well. All of that was to get investment. Okay, we attracted a bunch of investment. We're attracting. With the opening of MPRA and the potential opening of Anwar, you're attracting more investment. Yay, that's good.
Speaker 1:But the way that SB21 is set up is all of these three incentives that various people threw out at various times that got stacked in there. The cumulative impact of those incentives is to drive revenues from production tax down during high investment periods, high spending periods, and that was. We saw some of that in the last decade, but it was. It wasn't to the degree that we're seeing it in this decade. And so what you have is a situation in which production taxes are going up, or production volumes are going up something like 40% overall, with the kick in from the projected kick in from the NPRA, volumes going up something like 40%, but production taxes, revenues from production taxes, going down something like 55%, and that hole that's being created by the production taxes going down is going to have to be filled from someplace, and it's been filled over the last couple of years, last few years, by PFD cuts.
Speaker 2:So your overall solution to this is a refactoring of the tax of this SB21 to account for some of this.
Speaker 1:Yeah, we've got to go back into SB21 and fulfill its promise. The promise of SB21 was the state would sort of bide its time while some investment was made and then investment would result in additional production and that additional production the assumption was the additional production would result in additional revenues to the state. But it's not happening. The reason it's not happening is in part because the additional production is coming from federal lands where we get no royalties, and the additional production is coming with costs that are driving down production taxes. So we need to go back into SB 21 and rejigger it to fulfill the promise of as production increases. Fulfill the promise of as production increases, revenues to the state increase as well.
Speaker 2:Kim says Brad is a Debbie Downer this morning. No, it's just the truth. I mean, that's the thing you know. Look, I mean I can understand being excited about opening and exploring ANWR and NPRA. Those do bring some positives, but they also bring with them some negatives, and it's not so much that Mia in this article is talking about. You know how the state's going to be rolling in dough or anything is like that. But again, by avoiding the problem with it and acknowledging that there is an issue, we're exacerbating it. We're going to cause, you know, it'll be four years from now.
Speaker 2:Somebody will say how come we're not making all this money? We're pumping all this oil, how come we're not making all this money? And it's because nobody looked at the downside of it and said well, maybe something should change. Because again, historically, if you look at the who's, on whose side the Republicans have always been defensive of the oil industries in that regard, which I mean I could see there are the goose that lays the golden egg in the state. But sometimes you got. I mean, if you're going to do I mean to continue the analogy if you're going to do animal husbandry, sometimes you have to do things that are not pleasant for the goose, you know, to make sure that it stays warm and fat and dry and happy, and this might be one of those times right.
Speaker 1:Yeah, I think the thing that triggered me, michael, on this was the title Alaska has the chance to seize prosperity. Well, we're not going to seize prosperity if the consequence of this is we have to increase individual taxes, personal taxes, in order to make up for the additional hole that's being created out of production tax declines. That's going to be, rather than seizing prosperity, it's going to be seizing problems for the state and problems for the citizens of the state, particularly if we continue to have a personal tax structure as we do, with PFD cuts that take money only from Alaskans, don't have any sort of the contribution coming from non-residents, so you're going to have non-residents coming in. I mean, just picture this You're going to have non-residents coming in working on the additional oil field development, working on the additional activities that are going on, taking a significant share of the benefits of that in terms of jobs and in terms of wages for non-residents. They're not contributing to the solution.
Speaker 1:Under the current tax structure, the production taxes, which are supposed to benefit Alaskans, are in decline because of the way SB21 is operating through this period, and so Alaskans, only Alaskans. By using PFD cuts, only Alaskans are making up this hole. The non-residents are fat, dumb and happy. They get additional jobs, they take their paychecks, they go home, don't make any contributions to the state revenue and Alaskans are having to make up the hole that's being created by the decline in production taxes. So I think that's not prosperity, that is additional problems from a state fiscal standpoint. And so I think the thing.
Speaker 1:Mia doesn't talk about revenues to the state, but when she uses the words seize prosperity, it's only prosperity for a few.
Speaker 1:The way SB21 operates, for the state as a whole and for the citizens of the state who are gonna have to fill in this hole being created by declining production taxes, it's not prosperity. It is additional burden that this is going to create, and we don't get royalty out of it either. So it's additional burden that's being created by the additional development. I'm not saying the additional development is bad. I'm not saying we ought not to do the additional development, but we need to structure SB21, just like we did back in the early 20-teens when we had a problem with oil taxes. It was driving investment away from Alaska. People were investing other places instead of Alaska, just as we did in the early 20-teens. We need to recognize the problem for what it is and come in and develop the solution to it, and so Alaskans can share in this prosperity in terms of reducing the burden of personal taxes. Instead of increasing the burden of personal taxes, reducing the burden of personal taxes on Alaska families.
Speaker 2:And that's where the pushback is going to come. The same legislators that are touting the prosperity of it are going to push back on any kind of change to SB21 because, again, they fear killing the golden goose. Because that's the first thing that the oil companies say is well, we'll just take our bat and ball and go somewhere else.
Speaker 1:No, it's different circumstances now in the industry as a whole, different circumstances in Alaska than in the early 20-teens. We needed to to correct aces. Aces have gone way the hell too far right in in terms of taking a share. There is space and we've talked about on the show 500 to 600 million. There is space in in what's going on in the oil industry to correct taxes without without driving investment away. But we need to take it, or else that burden of declining taxes production taxes is going to what's going on in the oil industry to correct taxes without driving investment away. But we need to take it, or else that burden of declining taxes production taxes is going to fall back on Alaska. Personal taxes.
Speaker 2:Number two, Brad, number two of the weekly top three, and that is apparently Shelly Hughes. She's thrown her hat in the ring. She makes number seven of, I guess, potentially nine is what we're looking at right now. You say Shelly Hughes has a ready-made fiscal platform. The question is, will she use it? What do you mean?
Speaker 1:Okay. So you and I often go back on the show and discuss the 2021 Legislative Fiscal Policy Working Group recommendations and sort of use those as a template for how we need to address our fiscal situation Sort of the all-in approach right, a little bit of spending cuts, some restructuring of the PFD to go to POMV 50-50, some new revenues, a constitutional change in the spending cap to be effective, constitutionalization of the PFD. There's a list of things in the 2021 Legislative Fiscal Policy Working Group recommendations that I thought were outstanding and form the basis of trying to get our fiscal house in order. It's not just the 2021 Fiscal Policy Working group. You can find the same sort of thread back in Governor Dunleavy's fiscal year 2019, I think it was 2020, maybe it was 2020, 10-year forecast. You can find the thread of this sort of all-in approach a little bit from everything, a little bit of oil taxes, a little bit from everything to get the fiscal policy back in shape.
Speaker 1:Shelley Hughes has a perfect opportunity. I mean, shelley's theme so far in her announcement has been she can bring people together, she can work out solutions, she's a combiner, she's a consensus builder, she's a she's a a policy maker in the sense of of getting every people and everybody in the room and working on it. Shelly Hughes was a key component of the fiscal policy working group. There were two from the from the Senate, two from each body with with alternates. The two from the Senate were Lyman Hoffman well, two from the majority, two from the minority. The two from the Senate majority at the time were Lyman Hoffman and Shelley Hughes. Shelley was part of building that consensus, that sort of all-in approach, and I think that gives her a leg up in the campaign. I think she can point to the fiscal policy working group as an example of where she has participated and where she was helped. She helped shape a consensus agenda, a consensus body of recommendations to go forward on fiscal policy and I think she can show that she. I think she can use it to demonstrate that she has some history with working on fiscal policy solutions and, as governor Dunleavy never picked this up, but as governor she would pick it up and she would push it as an agenda for solving the fiscal situation. And I think during the campaign people are going to realize that we need a solution to our fiscal situation going forward, that we need to get Alaska's fiscal house in order, particularly when you look at the 10-year forecast and you look at the deficits that don't quit over the period and you look at things like declining production tax revenues and increasing personal taxes as a result of declining revenues from other sources, and people look at spending patterns and see potential for spending increases and worry about having an effective cap on that. So I think this is a perfect, frankly fiscal platform for Shelley and others. I mean, I think other candidates ought to adopt it as well, but I think Shelley, as a member of the Fiscal Policy Working Group, has the ability, has a leg up on being able to use that as one of the centerpieces of her campaign.
Speaker 1:I was surprised, to be honest, in her announcement, that she didn't use it in that way, to my understanding. I read everything about her announcement. She didn't mention the fiscal policy working group at all. She mentioned pieces of it. One piece was using POMV 50-50, which essentially shares inflation proofing between the two, between the PFD part and the portion that goes to government. She mentioned pieces of it but she didn't mention as an example of how she in the past has helped bring things together or as a set piece as a centerpiece of her fiscal policy.
Speaker 1:I think it's sort of sitting there and an opportunity for her and hopefully she will use it because I think that has the potential to drive the discussion about fiscal policy in the campaign.
Speaker 1:Candidates who endorse it, who talk about fiscal policy and talk about that solution the all-in solution as a centerpiece, I think, are positioned then in the new, when elected to the new legislature, are elected to become part of the group that works that through the legislature and gets it to the governor.
Speaker 1:And I think candidates ought to be endorsing and supporting the fiscal policy working group recommendations. But I think Shelley has the opportunity not only to use it to propel her campaign but also to use it to bring a discussion, to bring a focused discussion around fiscal policy and around these solutions as part of the overall, as part of everybody's campaign, as part of the overall election cycle, of everybody's campaign, as part of the overall election cycle. So I encourage her to do it. I encourage other candidates to do it as well. But because she was part of it, because she was a member of the working group, because she spent time and contributed heavily to the recommendations, I think and spoke about them highly afterwards, I think it's something that she can take the lead on that. Frankly, there are no other candidates currently in the election cycle who can position themselves in the same way.
Speaker 2:Well, so far, from what I've seen, no other candidates, including Bernadette Wilson, who's been on the program. I asked her about the fiscal policy and you know there was no, she didn't really have any knowledge of it. Shelley's got the intimate knowledge, she was part of it, but none of the candidates are really talking about the long term fiscal concerns of the state. It again, much of it I've used the word little bit ago is very aspirational, right, it's very. You know, we're going to kumbaya, we're going to come together, we're going to do this, we're going to do that, or, even if it's more strident, like Wilson's comments, there's really no, there doesn't seem to be a long-term fiscal answer to the problems that are facing the state. And again, as you look at the 10-year forecast, you understand very precarious position if we don't do something now on that 10-year forecast.
Speaker 1:Yeah, I think we're going to come back to that. I mean, the timing of this is we'll hit the next legislative session, we'll realize again that oil prices are down and we'll realize again that Alaska is in a difficult spot. When you look at the 10-year forecast that DOR is going to publish next year, it's going to be probably even worse. As they factor in the additional spending that's going to go on in the oil industry and the impact that's going to have, the follow-on impact that's going to have on production taxes, the 10-year forecast next year is probably even going to be worse. I don't see the circumstances under which it's going to look better than the most recent 10-year forecast. So I think next year's legislative session is going to help jail focus on fiscal policy again.
Speaker 1:And then the question is who's positioned themselves, or who can position themselves to get a leg up on that during the election cycle, and I think it's going to be people who have thought through the issues see that the all-in solution proposed by the Fiscal Policy Working Group has the best chance of bringing everybody together in a legislative session, because I mean, you recall, the fiscal policy working group had members of both bodies, had members of both the majority and the minority at the time had right-leaning Republicans, had left-leaning Democrats on the group and they all came together in this set of recommendations.
Speaker 1:So I think those who sort of think through this and think about the circumstances that are going to apply next year in terms of where the state's going to be from a fiscal policy standpoint, I think they're going to be having started in the process of developing their positions around the fiscal policy working group. I think they're going to be having started in the process of developing their positions around the fiscal policy working group. I think they're going to have an advantage, and Shelley has an advantage on top of everybody else in that regard.
Speaker 2:So this will be one of the main these. This will be one of the major questions that you're asking candidates, I'm assuming, when you're talking to candidates or interviewing, or if they're asking for money or whatever, this will be one of the first questions I'm assuming that you're going to ask of many candidates on this front.
Speaker 1:Yeah, yeah, I think that's fair. I think that's fair, I think I think yeah. The answer is yes, I think I think this is a fair way of assessing where candidates are on fiscal policy. And and if they say no, I'm not sure I would endorse that. Then the follow-up question is okay where do you differ from it and why do you think that works? Why do you think you can get? You know, 21 plus 11 plus one for that approach? That doesn't you know? Compromise, bring together in a comprehensive plan all of the pieces, and I think a candidate's answer to that is going to be telling as well. So, yeah, that'll be at the top of the list in terms of asking candidates positions on fiscal policy.
Speaker 2:Brad, paint me a picture If we don't pick this, the fiscal policy working groups plan, we're going to be back to this. We'll be back to the start. You know it'll going to be studying the study of what we've studied before. I mean, how many times do we have to come up with the same fiscal plan over and over and over again, or a different way to slice the apple, so to speak? This is something that's got to be addressed in the state, otherwise it's just again. The detriment is no PFD now personal taxes, yada, yada yada. I mean it just keeps going on and on and on.
Speaker 1:Yeah, that is where we head.
Speaker 1:And candidates who have not thought through the issue and endorsed something like the all-in approach, I mean I won't give them a whole lot of weight because I don't think they've thought through where the state is going, where the 10-year forecast or any forecast tells us where the state is going, I don't think they're serious candidates in the sense of fiscal policy.
Speaker 1:And to me, I mean fiscal policy is sort of at the center of the universe, right? You don't solve K through 12. You don't solve any of the other issues unless you have fiscal policy put together and you have a good sense of how many revenues you have and what caps on spending you have and how you're going to fit all the pieces together. If you don't have a good sense of that, I don't think you solve any of the other problems out there. So candidates who haven't thought through this or you know, who are knee jerking one way or the other without paying attention to the various factors that the working group recommendations have, I don't think they're serious candidates and I certainly won't. I certainly won't give them a whole lot of support if I don't think they're serious on the issue.
Speaker 2:This has been the challenge with the fiscal policy working group is that everybody came together and kumbaya and finally made a decision and made recommendations, yet not a single one of those recommendations have crossed the finish line. You know, ben Carpenter God love him did his best to try and drag some of this stuff kicking and screaming across the finish line and he just couldn't get it done there. Just there was just no political will to do any of that, and that's the that's the most disheartening part.
Speaker 1:Yeah, I think I think where Ben suffered was from from getting everything divided up. So so he had the sales tax proposal, but it sort of stood out there by itself. It wasn't a piece of the overall solution, it was sort of its own proposal out there. And then there were the spending cap. That sort of stood by itself. And another thing stood by. The constitutionalization of the PFD stood by itself.
Speaker 1:All pieces of the fiscal policy working group, but you didn't see it as a comprehensive whole, and I think this is one thing they said. Um, the FPWG, the fiscal policy working group, believes the legislature must pass a comprehensive solution. Fpwg members do not support addressing only one or two issues to the exclusion of others. The FPWG believes addressing these solutions as a comp, these issues as a comprehensive solution, solves not only a fiscal challenge but a political challenge as well, the political challenge being that you're going to have everybody you know everybody's going to oppose some piece of it. But if they see it as a comprehensive solution that's going to solve all of it, they're going to be more inclined to compromise on what they see as the most important piece because they see it getting handled as part of the, as part of the overall comprehensive solution. And I think where ben suffered was a the governor didn't back him up, uh, which uh, which is a problem in and of itself, but b it was all in these, in these various pieces, and I think, I think, to really be successful, a you're going to need the governor to be behind it, a governor to be behind it, so that governor to be behind it. So that's why I think Shelley has a leg up in this regard with respect to the campaign.
Speaker 1:But B it's going to have to be part of a package, that it's going to be a bill that will have various components to it, but a bill that you can then model and you can talk about as having a solution. I mean Trump saw the same thing. I mean that's why we had and you can, you know, talk about as having a solution. I mean Trump saw the same thing. I mean that's why we had the one big, beautiful bill, right, because he saw that there were various pieces out there.
Speaker 1:Or Mike Johnson, or whoever you know pushed for one bill, saw that there were various pieces out there that would get wound up around the axle if they were going. They were going if they were, if you were trying to push those separately. So, as part of the reconciliation, as part of a reconciliation package, just bring it all together and and and push it as a whole. That's, that's a pattern that I think you know we ought to be seeing with respect to solving a fiscal problem that was one of the challenges here is that it was it's all.
Speaker 2:the problem was the single subject rule. Right now, my argument to that would be this is all fiscal policy. This is all a single subject. The whole single subject is long-term fiscal planning. I mean, I, you know, but the, the lawyers and the bean counters in there said no, no, no, you can't do it, you have to do it individually. In there said no, no, no, you can't do it, you have to do it individually. Those eight or nine points that they talk about in their fiscal plan, which include cuts, which include new oil taxes, which included new, you know, proposed sales tax, which included, you know, constitutionalizing the PFD and the spending cap, all those eight points that they all finally agreed on. It was all a big, one, big, beautiful plan and then they had.
Speaker 1:then he had to break it up because again they kept coming back to him saying it's a single subject rule and that's that's where it got him yeah, I, I think I've read the eastman decision, the, the decision last week in which the supreme court uh upheld, upheld an appeal by David Eastman, supreme Court or Superior Court, anyway, one of the courts upheld a challenge by David Eastman that the combined package done at the end of the 2024 legislature was unconstitutional because it didn't adopt the single subject rule.
Speaker 1:And I've read that and I think that a package that you just described, particularly if pushed by the governor, particularly if outlined by the governor and by a governor and outlined as a comprehensive solution, a needed comprehensive solution, I think that would pass the single subject rule. I mean, it's sort of how you define the bill, it's sort of how you define the approach that the Supreme Court seems to rely on. And if you're picking legislation that's supposed to do different things, have sort of different motivations behind them and stack them together, that violates the single subject rule. But I think if you have a package of legislation, while broad, nevertheless, is focused on the single subject of solving the state's fiscal situation, I think that would pass the single subject rule. Part of Ben's problem was the governor never got on board, so he didn't define it as a as as that single subject and Ben really wasn't able to define it as a single subject, so I can see where people picked it apart, but I think there's a solution to that.
Speaker 2:We're continuing. Now the weekly top three. It's the final of the weekly top three and Brad postulates that there is quite possibly the perfect opinion piece, the perfect op-ed, he says. He says, Brad, what do you mean? There's perhaps the perfect op-ed out there. You may have found it. It's the unicorn in the wild. What are you talking about?
Speaker 1:Well, almost almost the perfect piece. I've got one nit to pick with it, but this is an opinion piece that Kevin McCabe wrote. I don't always agree with Kevin McCabe's writings, but this one I thought was particularly good on K-12 funding. It says Alaska's constitution does not mandate education funding and it's good from this standpoint and I would encourage people who haven't read it, who want to better understand the K-12 debate, to read it. It's good in that it starts with a constitutional provision. I mean, most of the arguments around K-12 is oh, the constitution requires that we do this or that or the other thing with respect to K through 12. And Kevin, the opinion piece, patiently sets out what the constitutional provision says, which says nothing about funding. And then he goes to the Moore case, which is a 2011 decision by Judge Gleason, which was on the state court. I think that talks about what this constitutional provision means.
Speaker 1:And Kevin goes through and articulates what the Moore case said, and here's what he says that decision outlined four components rational standards, effective assessments, adequate funding and oversight. But here's the key point Kevin's words the court did not say that funding alone satisfies the constitutional obligation. It said that funding must be paired with strong oversight and accountability the four components. That is the part often left out of the conversation, says Kevin, and that's right. I mean, that's what the Moore decision says, and it's important to understand the context around the adequate funding component, which is that it doesn't stand alone. There are four components, and when the governor or legislator say, look, we support funding, but it's in the context of making sure that we have rational standards, effective assessments and oversight, that they're articulating the funding in the context of what the Moore decision says they have to do that it's not just throw more and more and more money out there. It is put it in the context of these four components, and so I think the op-ed does a great job of articulating what the K-12 debate is really about and articulating where the two sides differ. One side is focused primarily, almost exclusively, on funding, that is, we have to have more money, we have to throw more money at the schools, we have to fill the hole that they say they have, while the other side hesitatingly says they agree to more money, but in the context of adequate standards, oversight and the other the other components of the of the more decision, and the side that's saying that funding is in the context of these other components has a lot more merit to it than the side that just says more money, more money, more money, more money, more money to it, than the side that just says more money, more money, more money, more money, more money. And I think Kevin's piece does a great job of explaining why that is and setting that up. Here's my one pick at it.
Speaker 1:Even the Republicans now say that, yes, we would agree to more money. No-transcript that included additional components around assessments and around. The governor's latest thing is he wants students to be able to move from one school district to another around things like that that they would agree to more money. In the context of that, my nit is this where the heck is the money supposed to come from? I mean, even if the Republicans are saying they would agree to more money if conditioned on all of these other things, and the Democrats are certainly saying more money, where is this supposed to come from? What's the solution on the revenue side or on the fiscal side that frees up these additional funds? Because we don't have them? I mean, the only place you're gonna get them is through even deeper PFD. The only place you're gonna get them right now is through even deeper PFD cuts by spending more money, especially in the context of declining production tax revenues. So where's this money supposed to come from?
Speaker 1:And I think every, every, every discussion about the K through 12 issue, every discussion, needs to discuss the fiscal aspects. How are we supposed to come up with this additional money? How are we supposed to? How does this fit in the context of an overall fiscal plan? I'm not. I mean, kevin will likely say look, the ADN has a limit of 650 words and I just didn't get it in there. I'm not asking for a whole paragraph. I'm not asking for, I'm not even asking for more than a sentence.
Speaker 1:But we need to keep all of this in the context the K-12 issue and the other issues in the context of we don't have additional money unless we take it out of the pocket of middle and lower income Alaska families through additional PFD cuts.
Speaker 1:We just don't have it and so we need to.
Speaker 1:Every time we talk about a solution to K-12 that involves additional spending and even the Republicans are talking about it now every time we talk about K-12 resolution that involves additional spending we need to resolve the fiscal policy issues also to come up with the additional money in a balanced way to go to K-12 spending. So my perfect op-ed on this issue would be what Kevin had about starting with the constitution and going through the Moore decision, but also then adding a discussion of the fiscal aspects of it, and and that we need to resolve the fiscal situation at the same time as part of getting K through 12 resolved. Or else we're just making the fiscal situation and the burden on middle and lower income Alaska families the very ones that we say we're trying to help with with K through 12, we're making the burden on fiscal on middle and lower income Alaska families the very ones that we say we're trying to help with K-12, we're making the burden on middle and lower income Alaska families even worse because we aren't solving the money issue at the same time.
Speaker 2:Well, and that's always been the challenge is again the answer for the one side is just more money, no matter what. More, more money. And Kevin is rightly pointing out that the Constitution says we provide public education. But it was the Moore decision that said we had to fund it. But again they keep dropping these other two components the accountability, the oversight, that kind of stuff. But the biggest question that, again, I come back to every time they scream Moore, is where does it come from? That's the thing, you know. It seems like that doesn't matter to them. Anybody you discuss with it doesn't matter. Wherever it has to come from, whoever has to be hurt, wherever it has to go. And again, it's not a solution. Kevin is at least saying these are the four things that the Moore decision said. We need to use all these in conjunction. Now, where does the money come from? It's obviously a bigger and deeper subject, but something that most people don't want to touch on. We talked about that earlier.
Speaker 1:It is a bigger and deeper subject, but to me it's the key subject. I mean, all we're doing, if we solve K 12 by taking additional PFD cuts, which is right now, what we would have to do all we're doing is making another problem worse Without solving the overall fiscal issue. By giving more money to Peter out of Paul's pocket, we're just making the problems with Paul worse. So I understand that. You know sort of like a single subject, bill right, you got to stick on the subject. You got to solve what's in front of you. But one of the pieces of solving what's in front of you about K through 12 is the fiscal issue of where the heck this additional money is supposed to come from. Because we're not talking about it. We're not talking about it just this one year.
Speaker 1:The governor's line item veto makes it a one-year issue. But the legislation passed it's permanent. I mean it goes on the books and sets up a higher BSA on a permanent basis. So, yes, we resolved the $200 this year. However, that plays out in the budget, but it shows up next year, the year after that, the year after that and the year after that and the year after that. It's not a one-year problem, it is a multi-year problem and so if we're going to to solve this, you've got to solve on a long-term basis. You've got to solve the fiscal situation on a long-term basis, or else it just keeps popping up as another problem next year and another problem the year after that, and another problem the year after that.
Speaker 2:I mean you're right. The fiscal policy is the cornerstone of any plan, for anything that we're talking about. Anything that has to be built, it has to be built on a sound fiscal plan. And the problem is there's no political will to put a fiscal plan in place because somebody's ox is going to get gored somewhere along the lines on this deal.
Speaker 1:Yeah, and that's why. To go back to the second segment, that's why I think Shelley's got a leg up in the campaign by saying I've been there, I've dealt with this issue. It didn't get done under the last governor, under the current governor. He didn't get behind it, he didn't endorse a comprehensive solution. I'm running on it. I've been there, I've been in the middle of this, I've seen all of the sides of it, I've seen how to get to a solution and that's what I'm running on. And I think candidates for the legislature and I think candidates for well, other candidates for governor ought to be doing it as well. But Shelly's position because she was on that working group Shelly's position, I think, to really make a great push on it.
Speaker 2:And I hope she does.
Speaker 1:I mean, it may be that she thinks that I mean part of it is revenues, right, and it may be that she thinks, well, I can't talk about revenues because that's going to take away from, you know, the base that I need to support me to get into the top four and that sort of stuff. And that'd be sad because because then we, then you know, the candidate that ought to be talking about the most, about the working group recommendations wouldn't because she's been taken off by one of these sub-issues. So I hope other candidates talk about it as well. Shelley does. But I think this is the key to solving the fiscal policy issues that we're facing.
Speaker 1:I think the fiscal policy issues we're facing are the key to solving the issues that we're facing. I think the fiscal policy issues we're facing are the key to solving the other issues we're facing. I mean people say we don't build enough, we don't have enough infrastructure, we don't have the money for it. People say we don't fund K-12 enough, we don't have the money for it, and you can just go on down the list. And until we get fiscal policy set and resolved and the issues around it sort of tightened up, I don't think we're going to solve any of these other things People are just going to keep arguing about. You know, we don't have enough money for this, or we don't have enough money for that, or we ought to be doing this, or we ought to be doing that. All of that involves money, and until we have that straightened out, it's just going to continue to go in a circle.
Speaker 2:Do you think that candidates are avoiding the issue of the fiscal thing because they simply think that the public doesn't want to hear about it? Is it too hard an issue? I mean what do you think? What's the reason why a lot of these fiscal topics don't get touched? Do you think?
Speaker 1:Oh, I think, and I would certainly be interested on what candidates themselves think, but I think it's because they're trying to appeal to subsections of the electorate as their base to get into the top four and they are wary of endorsing something or saying something that their base is going to go off on and and and attack them on. I mean Ben Carpenter, let's look. Let's look at Ben. Ben endorsed sales taxes and Jesse, jesse Bjorkman beat him over the head with it down in the Kenai Senate race, beat him over the head with it down in the Kenai Senate race and Ben lost that primary, lost that race because of the way in which Keel used, or Dorkman used, the sales tax issue. So I think candidates are wary of their opponents or of their base picking out one issue from the comprehensive solution and say, well, if you endorse the comprehensive solution, you must endorse this, and if you endorse this, that's wrong, because now you're endorsing revenues, you're endorsing taxes and I don't want to tax her in the governor's office. So the candidates have to be prepared to say it's one component. Look what you're getting. You're getting a constitutional PFD, you're getting a spending cap, you're getting. You know, and go on down through the list of the other pieces that offset the impact of the one piece of revenues, and I think candidates need to be prepared to do that.
Speaker 1:But I think they're concerned that a part of their base that they feel they need are going to pick out that one issue and beat them over the head with a head with that one issue. I mean I mean that that happened to the, the representative up in up in Massey that we were talking about last week. I mean she endorsed Senator Yuntz resolution on, or proposed revenues on, the digital tax, the proposed revenues coming from the digital tax. She endorsed that and her district starts beating her district Republican committee starts beating on her. I mean that that is one piece of a comprehensive solution but they pick out that piece and start beating on her about it and that's just wrong. I mean that's why I gave her $2,000, because that's just wrong. To get to a solution, we've got to have a comprehensive solution that has multiple pieces and we need to support candidates to talk about those multiple pieces as opposed to people who want to pick one of them and beat them over the head about it.
Speaker 2:Again, as far as legislatively, I mean, the single subject rule is really what kind of submarine this whole deal. And again, my argument is this is all about a fiscal policy. I don't know why that argument can't be made that these are all part and pieces. I mean the constitutional provision has to be standalone because it's a separate bill. I mean that's required to be a separate bill, but everything else could be in one comprehensive package, as you know, like an omnibus type bill that deals with fiscal policy, because every one of those components is dealing with fiscal policy. So I don't know if it is the bureaucracy that's pushing back on this, whether you know ledge legal or who I don't know, but it to me it's like this is all, this part, this is all part of a whole here and you can't just pick each one out.
Speaker 2:And in fact they in their own, in their own report, and they talk about this. You can't take this one piece at a time. It has to be a holistic approach. That was their belief and they started out with that and they ended with that. It must pass a comprehensive solution is what they say, and that's part of the problem. All right, brad, we got to go. Thanks so much for coming on board. It's good to talk with you, my friend.
Speaker 1:Thanks for being part of it today, michael as always, thanks for having me talk with you, my friend. Thanks for being part of it today. Michael, as always, thanks for having me. Well, that's a wrap for another week's edition of the Weekly Top Three from Alaskans for Sustainable Budgets. Thank you again for joining us. Remember that you can find past episodes on our YouTube, soundcloud, spotify and Substack pages, and keep track of us during the week on Facebook and Twitter. This has been Brad Keithley, managing Director of Alaskans for Sustainable Budgets. We look forward to you joining us again next week on the Weekly Top Three. Thank you.
